Abstract

Addis Ababa, the capital of Ethiopia, has been experiencing rapid urbanization as the entire country has transformed into an emerging market economy featuring a spectacular average ten percent GDP growth rate over the last ten years. However, this economic growth has not provided a poverty elimination momentum for the city where over half of its residents still live in slum areas and over thirty percent are unemployed or involved in informal economic activity. This paper examines the factors behind Addis Ababa’s inhibited urban progress focusing on urban legacies stemming from the city’s one-hundred-thirty years of independent development as well as on the present-day economic challenges. The empirical evidence suggests that there is a correlation between Addis Ababa’s inadequate investment in urban housing and infrastructure and Ethiopia’s low levels of foreign direct investment. Further analysis indicates that the country’s service-driven growth model of development may be contributing to overurbanization and poverty production in Addis Ababa.

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